The Fed’s Hobson’s Choice: End QE and Zero-Interest Rates or Destabilize the Dollar and the Treasury Market Posted on June 24, 2014 Though the Fed is doing its best to mask its abject failure and lack of choices with public relations, the reality is it has no choice but to taper and eventually end its endless spew of credit and its unprecedented and destabilizing purchases of assets.

Many smart observers assume the Federal Reserve (and other central banks) can print money and buy assets like bonds, mortgages and stocks unconstrained by any limit. Indeed, at first glance, it seems like a closed circle: print the money and use it to buy bonds, mortgages and equities, which are booked as assets.

The more the Fed buys (or enables proxies and financiers to buy), the greater the assets value, as buying pushes prices higher. After all, look what quantitative easing (i.e. buying assets like Treasury bonds and home mortgages) and zero-interest rates have done for the stock market: to the moon, baby! SILVER And to housing: thanks to the printing press and buying mortgages, the Fed inflated an echo-bubble to soften the inevitable crash of the previous bubble:

On the surface, there are no intrinsic limits to QE and central bank money-printing:in other words, there appears to be nothing stopping the Fed from printing essentially limitless money and buying up the majority of Treasury bonds, mortgages and stocks.

But we must be mindful that the economy is not linear. Pushing asset prices higher via unlimited credit at zero-interest rates has not trickled down to wages or consumer spending.

That is, the wealth effect is missing in action despite a $20 trillion increase in household net worth. (Most of this increase flowed to the top 10%, and within that, most flowed to the top 1/10 of 1%.

Meanwhile, risky credit bets are soaring: subprime auto loans are now common, margin debt has skyrocketed and purchases of junk bonds have gone through the roof. The Fed’s printing and asset purchases do not occur in a vacuum.

Fed printing and asset purchases affect the reserve currency, the U.S. dollar, and the Treasury market, which the Fed now dominates via its purchases.

Keeping interest rates near zero has removed any financial incentive to buying Treasury bonds other than flight to safety.

The Treasury must also sell new bonds to replace the immense amounts of T-Bills that are maturing. The more T-bills the Fed buys to keep interest rates at zero, the more it drives foreign and domestic buyers out of the Treasury market. This is also true of the U.S. dollar. This sets up the Fed’s Hobson’s Choice, which is the term for an illusory choice, i.e. a choice in which only one option is offered.

The sudden emergence of End the Red rallies in Germany is a fascinating development spreading throughout Germany protesting the corrupt and dying Rothschild NWO global status quo. One of the key targets of these groups is the Rothschild U.S. Federal Reserve system, which is the core cancer infecting the entire planet.

According to the organizer of these rallies, they have now spread to up to 100 cities and have a combined attendee base of around 20,000. What is also interesting, is that the mainstream media in Germany is calling them Nazis. In Germany, if you don’t support Central Banking, this apparently means you are a Nazi. What a joke.

Future generations will look back at Central Banking as we look back at slavery.

If the Fed continues QE, it destabilizes the Treasury market that funds U.S. government deficits, and the hegemony of the U.S. dollar.

If it ceases QE, interest rates will rise as non-central bank buyers will demand an actual return on their capital.

Rising rates will crush the echo bubbles in housing and the stock market, which has been propped up by dividend-paying stocks and speculative issues purchased with Fed-supplied “free money.”

For the Deep State, there is no choice: dollar hegemony is paramount.

Rising interest rates and the fate of financiers who have over-leveraged the Fed’s free money are not even secondary.

The Fed believed that five years of free money and incentivizing risk would heal the economy. They were wrong. The real economy is more fragile and dysfunctional than ever due to the distortions created by Fed policies [Keynesian Economics], while the top 1/10th of 1% have feasted on the asset bubbles inflated by these same policies.

We discuss the fact that neoliberal capitalism has become terrorism and that the ‘terrorists’ don’t see themselves as any different than Halliburton or Chevron, producing glossy prospectuses filled with gory facts for prospective investors. In the second half, Max interviews Luke Rudkowski of WeAreChange.org about crowdfunding, cryptos, independent media and mass protests in Berlin against the U.S. Federal Reserve Bank.Max Keiser

Meanwhile, beneath the crony-capitalist [communism’s centralization scheme] celebration of new asset bubbles, the foundations of the nation’s fiscal security–the Treasury market and the U.S. dollar–have been undermined and destabilized by these same Fed policies. Those who focus solely on the Fed assume the ruling Elite is monolithic: unified in worldview, strategy and goals.

I believe this is overly linear and overly simplistic: there are competing elites, and nations fall when their elites experience profound disunity.

Though the Fed is doing its best to mask its abject failure and lack of choices with public relations (“Pay no attention to what’s behind the curtain!”), the reality is it has no choice to tapering and eventually ending its gargantuan spew of credit and its unprecedented and destabilizing purchases of assets.

The German police took off their helmets and marched with the protesters against Rothschild Central Bank – clearing the way for them.

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Unconstitutional Powers By Repetition

Usurpations by one branch of government, of powers entrusted to a coequal branch, are not rendered constitutional by repetition.

The United States Supreme Court held unconstitutional hundreds of laws enacted by Congress over the course of five decades that included a legislative veto of executive actions in INS v. Chada, 462 U.S. 919 (1982).

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True Federalism.

“The way to have good and safe government is not to trust it all to one, but to divide it among the many, distributing to every one exactly the functions he is competent to.

Let the national government be entrusted with the defense of the nation, and its foreign and federal relations; the State governments with the civil rights, law, police, and administration of what concerns the State generally; the counties with the local concerns of the counties, and each ward direct the interests within itself.

It is by dividing and subdividing these republics from the great national one down through all its subordinations, until it ends in the administration of every man’s farm by himself; by placing under every one what his own eye may superintend, that all will be done for the best.

What has destroyed liberty and the rights of man in every government which has ever existed under the sun? The generalizing and concentrating all cares and powers into one body.”